Rex points at carbon tax in profit warning

Regional Express has warned that its pre-tax profits will fall by as much as 35 per cent this financial year due to an expected economic slowdown and additional costs such as the carbon tax.

Australia’s largest independent regional airline has told shareholders at its annual meeting in Sydney today that pre-tax profits could drop by between 25 and 35 per cent to as low as $22.8 million in 2012-13.

The latest guidance from the ASX-listed airline is worse than the outlook Rex issued in August when it said earnings could fall by between 15 and 25 per cent.

Last financial year Rex posted a record pre-tax profit of $35.1 million, which made it more profitable than either of its much larger rivals Qantas or Virgin Australia.

As well as an the impact of an economic slowdown, Rex has blamed its lower earnings guidance on the carbon tax, additional security charges and the end of an en-route rebate scheme from the federal government.

Shares in Rex fell 2.5 cents, or 2.2 per cent, to $1.14 in morning trade.

Rex had previously put the cost of the additional charges – including those from the carbon tax – and the end to the rebate scheme at between $4 million and $5 million.

Despite the headwinds, Rex’s deputy chairman, John Sharp, told shareholders the airline was ‘‘well poised to face the many challenges ahead’’. He cited the strong earnings in the longer term from the company’s new pilot training school, the Australian Airline Pilot Academy.

Rex operates scheduled passenger services to 35 regional destinations in five states, and owns charter operator Pel-Air and Dubbo offshoot Air Link. The company has a fleet of more than 40 turbo-prop aircraft.